American Economic Review
ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)
Estimating a War of Attrition: The Case of the US Movie Theater Industry
American Economic Review
vol. 105,
no. 7, July 2015
(pp. 2204–41)
Abstract
This paper empirically studies firm's strategic exit decisions in an environment where demand is declining. Specifically, I quantify the extent to which the exit process generated by firms' strategic interactions deviates from the outcome that maximizes industry profits. I develop and estimate a dynamic exit game using data from the US movie theater industry in the 1950s, when the industry faced demand declines. Using the estimated model, I quantify the magnitude of strategic delays and find that strategic interactions cause an average delay of exit of 2.7 years. I calculate the relative importance of several components of these strategic delays. (JEL D92, L11, L82, N72)Citation
Takahashi, Yuya. 2015. "Estimating a War of Attrition: The Case of the US Movie Theater Industry." American Economic Review, 105 (7): 2204–41. DOI: 10.1257/aer.20110701Additional Materials
JEL Classification
- D25 Intertemporal Firm Choice, Investment, Capacity, and Financing
- L11 Production, Pricing, and Market Structure; Size Distribution of Firms
- L82 Entertainment; Media
- N72 Economic History: Transport, Trade, Energy, Technology, and Other Services: U.S.; Canada: 1913-